The advent of the internet has made it easy for investors, and particularly online Forex investors. Therefore, Forex trading can be performed online. It is different from stock trading because it involves exchanging currency online for purposes of making profits.
Online Forex trading offers the benefit of convenience, by allowing investors to trade anytime and from anywhere around the globe. All you need is a computer and an understanding of the trading requirements, to start the practice.
An understanding of online Forex trading is crucial for purposes of ensuring proper investment of money. There are several Forex trading websites that offer practice accounts to help investors learn the ups and downs. The benefits of online Forex trading include:
· 24 hour trading
The market is open 24 hours around the world. This means you can trade anytime, day or night, because there is an open market in some part of the world. Trading is usually open in many parts of the world from Sunday evening to Friday evening. A 24 hour market allows investors who are busy during the day, perhaps because of being in full employment or business, to participate in the market during their free time.
· High liquidity
An asset is said to be liquid if it can be converted into cash readily, without employing price discounts to attract buyers. Online Forex trading is highly liquid in the sense that large amounts of currency can be moved in and out of most currencies with very little price movements. Furthermore, you can exchange currency anytime, day and night with no restrictions being posed on you.
· Low transaction costs
Forex trading carries lower transaction costs compared with trading at the physical market. The broker is able to share some of the benefits in the form of costs savings, arising from facilitating the trade online. The cost of the transaction is covered by the price, referred to as the spread, which is the difference between price of buying and selling.
There are many trading strategies that can be employed by investors, such as leveraging to maximize the trading benefits. Leverage is the capacity to trade more currency than what is available in the investor’s account.
Online trading accounts allow investors to start trading with as little as $50. In contrast, trading with stocks and bonds requires a huge financial investment. Therefore, if you chose to trade at 60:1 leverage, you could trade $60 for every $1 in your account. Hence, you could end up controlling $60,000 using $1,000 of capital.